Open Market Operations

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In Turkey, the Central Bank uses open market operations to make sure that the short-term interest rates materialize around the policy rate(s)* and to regulate liquidity in the financial markets. The general framework of open market operations is specified in Articles 52 and 56 of the Central Bank Law.

Open market operations are conducted only for monetary policy purposes and cannot be used to provide credit to the Treasury, to public institutions and agencies, or to other institutions and establishments. The CBRT cannot purchase debt instruments issued by the Treasury or public institutions and agencies from the primary market.

* The policy rate set by the Central Bank is the one-week repo rate. 

Types of Open Market Operations 

Deposits

A deposit facility is provided by the CBRT for banks against collateral, within their maximum limits, to be paid back with certain maturities. With this facility; banks can lend or borrow in Turkish liras over the interest rates announced by the Central Bank during the day. 

The deposit facility is used via the Interbank Money Market functioning within the CBRT. 

Data for Deposit Transactions via Quotation 

Data for LLW Deposit Transactions via Quotation 

 

Repo

In general, repo transactions are conducted to increase liquidity in the banking system in cases of temporary liquidity shortages in the market. 

In this framework, the Central Bank buys securities from banks/intermediary institutions authorized to conduct open market operations with an agreement to sell the same securities back on some specified future date. In a repo transaction:

  • The value date is the date of the transaction.
  • The security is purchased at the price set at the time of transaction
  • The resale price is fixed on the value date of the purchasing transaction. 
  • The counterparty commits to repurchase the security on the maturity date.

Net funding of the Central Bank is the sum of deposit and repo transactions.

Data for Repo Auctions

Data for Repo Transactions through Quotation

 

Reverse Repo

Reverse repo is a transaction conducted to withdraw the excess liquidity in case of temporary excess liquidity in the market. 

The CBRT sells the government securities in its portfolio to the authorized banks/intermediary institutions while making a commitment to repurchase them on some specified date in the future at the price fixed at the time of the transaction.

In this process:
  • Value date is the date of the transaction.
  • The security is sold at the price set at the time of transaction.
  • The repurchase price is fixed on the value date of the selling transaction.  
  • The counterparty commits to resell the security on the maturity date. 
 
Data for Reverse Repo Auctions

Data for Reverse Repo Transactions through Quotation
 

Outright Purchase

Outright purchase transactions are generally conducted in case of permanent liquidity shortages in the market. In this type of transaction, the CBRT purchases from the authorized banks/intermediary institutions the government securities in circulation, on the value date*, at a price set on the date of the transaction.

* This is the difference between the transaction date and the date the transaction is completed. 

Data for Outright Purchases through Auction
 
Data for Outright Purchases through Quotation
 

Outright Sale

Outright sale transactions are generally conducted in case of permanent excess liquidity in the market. In this type of transaction, the CBRT sells the government securities in its open market operations portfolio to authorized banks/intermediary institutions, on the value date, at a price set on the date of the transaction.

Data for Outright Sales through Auction

Data for Outright Sales through Quotation

 

Liquidity Bills

Liquidity bills are instruments used to absorb the excess liquidity in the market with an aim to increase the effectiveness of the CBRT’s monetary policy. As per Article 52 of the CBRT Law, the CBRT may issue liquidity bills on its own behalf and for its own account with a maximum maturity of 91 days. 

Liquidity bills can be sold and purchased in the secondary market as well. If necessary, the CBRT may redeem liquidity bills before maturity. 

Liquidity bills are issued to increase the effectiveness of open market operations when necessary and should not be taken as an alternative investment instrument. 

Data for Liquidity Bill Issues

 

Turkish Lira Deposit Purchase Auctions

The CBRT conducts Turkish lira deposit buying auctions to enhance the effectiveness of the operations for sterilizing excess liquidity in the market by purchasing Turkish lira deposits from banks through auctions.